(Solution) If Apple Costs $130 Today, Interest Rates Are 10%, And Apple Pays A $3 Dividend Every Year, What Is The Fair Forward Price Of A Five-year Forward? | Snapessays.com


(Solution) If Apple costs $130 today, interest rates are 10%, and Apple pays a $3 dividend every year, what is the fair forward price of a five-year forward?


    •If Apple costs $130 today, interest rates are 10%, and Apple pays a $3 dividend every year, what is the fair forward price of a five-year forward? •What would the fair forward price be if Apple’s stock price goes up to $150? : ($100 IBM price today, 2 year forward, 10% interest rates, $5 dividend per year), suppose you bought the forward at the fair forward price of $110.5. Now IBM falls to $80. You want to get out. What is the most you would pay to get out of your forward contract struck at $110.5?

 


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This question was answered on: May 23, 2022

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